9/08/2006 @ 8:40AM

Private Jet Boom

Jet charter bookings in the U.K. shot up 40% for the week following the foiled airliner bomb plot in London. Sales worldwide of private planes rose 35% in the first half of 2006 to a record $9 billion. Good news for Gulfstream and Cessna is bad news for the airlines. The number of passengers in the U.S. paying for first-class, business-class and full-price economy airfares has halved in the past five years, from 18% to 9%, says the Velocity Group, an aviation consultancy. The number of Mr. Bigs boarding their own magic carpets now equals one-third of all the premium-fare-paying passengers using the U.S. airline system.

That leaves two-thirds of us “premium” business travelers who, when being frisked for tiny tubes of toothpaste, don’t feel so premium. But now there’s hope for us poor suckers: small jets and air taxis. Hallelujah–free at last.

In July Eclipse Aviation of Albuquerque, New Mexico won U.S. Federal Aviation Administration certification of its minijet. The Eclipse 500 sells for $1.5 million, seats six, flies high (41,000 feet, above usual commercial flights), fast (425mph) and long (1,200 miles or more on full tanks). It can land on and take off from strips as short as 2,250 feet. Bill Gates is an Eclipse investor, and the company just raised another $225 million.

Private jet king Cessna of Wichita, Kansas is on the verge of certifying its small jet, the Mustang. Larger and more luxurious than the Eclipse 500, the six-seat Mustang will sell for $2.6 million. Also on the horizon is Denver-based Adam Aircraft’s $2.3 million Adam 700. The company just received $93 million in funds led by a Silicon Valley venture capital firm, Doll Capital Management. And don’t forget
Embraer
. The Brazilian company is one of two dominant makers of regional jets and within the next two years will offer its first minijet, the Phenom 100. At $2.9 million it will seat up to eight in a plush interior supplied by BMW. Extremely intriguing–and pictured in our Sept. 4 issue –is
Honda
‘s small jet, the HondaJet, as yet unscheduled and unpriced.

You can’t afford a minijet? I can’t, either. But I do fly 250,000 miles a year, nearly all of it ticketed at a premium price: full-fare coach, business or first class. If you can pay those prices, says Eclipse CEO Vern Raburn, you can swing the price of a private air taxi ticket.

The hope of air taxis is to bring the price of jet charters down to the executive masses. The combination of cheap jets with greater fuel efficiency and a critical mass of these critters in the sky can, in theory, lower the price per seat considerably. Smart business minds are betting on it. One is Robert Crandall, former CEO of
American Airlines
, who now heads POGO, an air taxi service headquartered in Connecticut. Crandall is the visionary who introduced yield-management software to commercial airlines. He’s also a financial hard butt. So if Crandall believes in air taxis, we should be hopeful. Another new service entry is DayJet of Delray Beach, Florida, founded by Ed Iacobucci. Like Eclipse’s Raburn, Iacobucci has a tech background. He founded software company Citrix.

Not all of the minijets will succeed. The air taxi model is unproven and may flop. But I don’t think so. The trends say some minijets and some air taxi service companies will break through.

Meet Diller, Eisner and Wright at MEET

A tidal wave of new technology is set to overwhelm the media and entertainment business like never before. Consider:

Hundreds of millions in potential film revenue, downloaded and traded free over the Internet.

60-year-old broadcast television networks supplanted by Internet television, such as YouTube.

The music industry’s multibillion-dollar empire, now shrunk to four major labels and hiding out from the iPod, Zune and XM threats.

And yet every time Big Media and Entertainment have feared new technology they have ultimately caught on to the new wave, building entirely new sales and profit streams. By the VCR’s peak in 1990, more than 200 million VCRs were being sold worldwide each year. Today the DVD business in the U.S. brings in $9 billion a year. That’s equal to the box office revenue that films bring in at the nation’s movie theaters. Digital downloads and other new technology hold the same vast promise–but only if you can find the magic combination of technology, talent and distribution models.

I rarely use this space to promote events, but this I can’t resist. If you want to know who will make and who will lose money in the convergence wars now besetting media, entertainment and tech, then I invite you to sign up for: MEET 2006, a FORBES conference to be held Oct. 24 and 25 at the Beverly Hills Hotel in Beverly Hills, California. Confirmed speakers include: IAC Chairman Barry Diller, ex-Disney chairman Michael Eisner, NBC Universal Chairman Bob Wright, YouTube founder Chad Hurley, actor Morgan Freeman, the CEOs of Sling Media,
Netflix
, 2929 Entertainment, as well as high-level executives from
Google
,
Yahoo
and
Microsoft
. Go to www.forbesconferences.com to learn more. Or call: 212-367-2504.